Carlos Slim, the telecommunications tycoon who controls Mexico’s America Movil SAB (AMXL), is the richest person on Earth, according to the Bloomberg Billionaires Index, a daily ranking of the world’s 20 wealthiest individuals… Read more
Now, it’s not as if we’ve ever done frivolous speculation here on FT Alphaville. Plus, possibly the successor mystery is overblown: everyone knows Warren Buffett’s successor will have been at Berkshire Hathaway forever, that person will be loved by the board, and the whole thing is really about BRK’s ability to operate with enormous amounts of investor trust and goodwill (to go with its insurance goodwill, haha), etc.
It’s not new that Berkshire Hathaway’s Warren Buffett prefers productive assets to unproductive ones, but his latest letter to shareholders sets out his compelling argument…
…The major asset in this category is gold, currently a huge favorite of investors who fear almost all otherassets, especially paper money (of whose value, as noted, they are right to be fearful). Gold, however,has two significant shortcomings, being neither of much use nor procreative. True, gold has someindustrial and decorative utility, but the demand for these purposes is both limited and incapable ofsoaking up new production. Meanwhile, if you own one ounce of gold for an eternity, you will stillown one ounce at its end. Read more
Tesco has been boosted by the revelation that Warren Buffett’s Berkshire Hathaway group spent about £500m raising his stake in the embattled retailer after its shock profit warning last week, the FT reports. A regulatory filing showed on Thursday that the US billionaire’s investment vehicle increased its stake in the world’s third biggest supermarket chain by sales from 3.21 per cent to 5.08 per cent over two days – January 12, the day Tesco issued its first profit warning in 20 years, and January 13. The move by Berkshire Hathaway, which controls investments in listed entities worth about $67bn, is likely to be taken by some other investors as a sign of confidence in Britain’s biggest supermarket chain by market share.
Berkshire Hathaway is to buy the local newspaper read by Warren Buffett, in spite of his longstanding view that the press faces a future of dwindling profits. The FT reports Mr Buffett on Wednesday announced the purchase of the Omaha World-Herald Company, which operates several daily and weekly titles across Omaha and south-west Iowa. Berkshire will pay $200m, including the assumption of debt, according to the newspaper. Mr Buffett began warning on the economics of the newspaper industry as early as 1991, but on Wednesday he said the World-Herald “delivers solid profits and is one of the best-run newspapers in America”. The investment follows another recent departure from a longstanding industry view by Mr Buffett, who last month disclosed a 5.5 per cent stake in IBM worth $12bn, his first big investment in a technology sector that he had shunned in the past as too complex and opaque. Read more
Berkshire Hathaway has taken a stake in IBM worth more than $10bn, its first big investment in a sector historically shunned by Warren Buffett, reports the FT. In a CNBC interview on Monday, the 81-year-old billionaire disclosed that he had secretly amassed a 5.5 per cent stake worth $10.7bn in the US information technology company since March. “I don’t know of any large company that really has been as specific on what they intend to do and how they intend to do it as IBM,” Mr Buffett said, citing the company’s unusual five-year plan outlining earnings per share, cash positions and shareholder-return goals until 2015. Read more
Warren Buffett’s Berkshire Hathaway invested $23.9bn in third quarter of the year – the highest level in at least 15 years – as the investor upped equity investments and diversified away from his traditional consumer and financial company focus, Bloomberg reported. Buffett’s purchases included $6.9bn of equities, $5bn of preferred shares and warrants in Bank of America and the $9bn acquisition of Lubrizol Corporation. Buffett deployed his counter-cyclical firepower in the third quarter as stock valuations declined amid the US debt ceiling debacle and the ongoing eurozone debt saga. Partly as a result of the spending splurge Berkshire Hathaway’s cash balance has fallen from $47.9bn on June 30 to $34.8bn, as of end-September. Buffett last spent more than $20bn in a given quarter during the second and fourth quarters of 2008, respectively, Bloomberg noted. Read more
Berkshire Hathaway, the candy-to-cargo train conglomerate controlled by Warren Buffett, will buy back its own shares for the first time, as the famed stock investor declared the market value of his own company to be extremely cheap, reports the FT. Berkshire’s board said its cash hoard could be used for share buy-backs, provided the group paid no more than a 10 per cent premium to current book value and its consolidated cash holdings did not fall below $20bn. Lex warns against reading too much into it. But Heard on the Street argues that the move may be a dangerous one, if investors see the buy back price as a ceiling rather than a floor. Read more
General Electric has confirmed that it is to pay $3.3bn to Warren Buffett’s Berkshire Hathaway to buy back preference shares that Mr Buffett bought during the credit crisis in October 2008, the FT reports. Berkshire is being paid a 10 per cent premium on its original $3bn investment and has also been collecting a 10 per cent dividend. Berkshire Hathaway made the 2008 investment as part of a plan to shore up confidence in GE, following a sharp rise in the cost of insuring debt for GE Capital, the financial services arm, which represented about half the group at the time. GE was subsequently forced to cut its dividend and lost its triple A credit rating, as GE Capital suffered large losses. Its earnings have since rebounded, although it has been hit again over the past couple of months by turmoil in the financial markets. Read more
Warren Buffett has hired a second money manager at Berkshire Hathaway, a move interpreted as another piece of his closely guarded succession plan into place, the Wall Street Journal reports. The Omaha-based conglomerate named Ted Weschler, a 50-year-old from Charlottesville as an investment manager. Weschler currently runs hedge fund Peninsula Capital Advisors which holds roughly $2bn in assets, says the WSJ. Weschler met Buffett last year after winning a meal with him at a charity auction. He is understood to be winding down his fund before joining Berkshire in early 2012. Warren Buffett, who turned 81 at the end of August and remains in good health, currently has no public plans to relinquish any of his roles at Berkshire. He is chairman and chief executive and oversees the company’s $110bn portfolio of stocks, bonds and other investments. Read more
A hedge fund manager who paid more than $5m in charity auctions to have lunch with Warren Buffett has been hired to be part of the team that will oversee Berkshire Hathaway’s investments after the “Oracle of Omaha” leaves the company, the FT reports. Ted Weschler, manager of Peninsula Capital Advisors, a Virginia-based hedge fund with $2bn in assets under management, will join in 2012 to manage a $1bn-$3bn slice of Berkshire’s $66bn in equity securities, the company said on Monday. Mr Weschler is expected to serve alongside Todd Combs, formerly manager of hedge fund Castle Point Capital, who was appointed in 2010, as part of a new generation of managers who will oversee Berkshire’s equity and debt investments. Berkshire said it might add a third new manager. Mr Weschler, who is not widely known in the fund management community, first came to Berkshire’s attention when he spent more than $5m in charity auctions to have lunch with the legendary investor, according to an interview with Mr Buffett in Fortune magazine.
Warren Buffett’s Berkshire Hathaway has agreed to invest $5bn to shore up confidence in Bank of America, in a deal that underscores the billionaire’s role in stabilising US financial institutions in times of crisis, the FT reports. BofA’s shares have tumbled almost 40 per cent this year amid concerns the US bank’s troubled mortgage business could overwhelm its balance sheet, forcing the lender’s executives to reverse course and raise additional equity. News of the Berkshire deal on Thursday sent BofA’s shares sharply higher. They settled at $7.63, up 9 per cent. People familiar with the matter said that Mr Buffett on Wednesday signalled to Brian Moynihan, BofA’s chief executive, that he was willing to invest. While Mr Moynihan maintained that the bank did not need extra capital, he agreed Berkshire’s move could ease Wall Street’s nerves. “Bank of America is a strong, well-led company,” Mr Buffett said. “I called Brian to tell him I wanted to invest in it. I am impressed with the profit-generating abilities of this franchise, and that they are acting aggressively to put their challenges behind them.” Read more
Warren Buffett’s Berkshire Hathaway has agreed to invest $5bn to shore up confidence in Bank of America, the FT reports, in a deal that underscores the billionaire’s role in stabilising US financial institutions in times of crisis. News of the Berkshire deal on Thursday sent BofA’s shares sharply higher. They settled at $7.63, up 9 per cent. People familiar with the matter told the FT that Mr Buffett on Wednesday signalled to Brian Moynihan, BofA’s chief executive, that he was willing to invest. While Mr Moynihan maintained that the bank did not need extra capital, he agreed Berkshire’s move could ease Wall Street’s nerves. Read more
Our apologies for another BofA post but analyst reaction has been coming in and though most it can be summed as “confidence boost that changes little”, we think there’s a couple of extra points worth mentioning. Read more
By John McDermott, Cardiff Garcia, and Joseph Cotterill
BofA’s Buffett bounce was at 13 per cent at pixel time, paring gains from a 20 per cent high earlier on Thursday. Part of this may be due to a reverse torpedo-like situation, according to the experts at Data Explorers. There was a 16 per cent increase in the amount of shares out on loan (a proxy for shorting) this week, which may have been partly due to hopes for profit taking on a rebound. Read more
American chief executives are weighing into the debate on the US deficit, the FT reports. Billionaire investor Warren Buffett on Monday said the mega-rich had been “coddled long enough by a billionaire-friendly Congress” and urged the new Congressional “supercommittee” created to find fiscal savings to raise tax rates for American households earning more than $1m a year, and to immediately end the 2 percentage point tax cut for the richest Americans, instituted by former president George W. Bush. Reuters says Mr Buffett’s comments chime with earlier statements he has made, but have “struck a nerve” nonetheless. Meanwhile Starbucks chief executive Howard Schultz urged other CEOs to boycott donating to US political campaigns as a protest against Congressional warring over the debt limit. “I am asking that all of us forego political contributions until the Congress and the President return to Washington and deliver a fiscally disciplined long-term debt and deficit plan to the American people,” Mr Schultz wrote in an email sent to business leaders that was obtained by Bloomberg, which says among the recipients of the email were NYSE Euronext chief executive Duncan Niederauer and Bob Greifeld, chief executive of Nasdaq OMX, who in turn emailed letters to companies listed on their respective exchanges. Read more
Citigroup has scaled back the planned sale of its former CitiFinancial unit as part of negotiations with Centerbridge and Leucadia, as potential buyers grapple with how to fund the business as a standalone entity. Citi is discussing a sale of about $9bn in assets, held within the consumer lending business recently renamed OneMain Financial, people familiar with the matter told the FT. About $4bn in property assets have been carved out of the sale. The bank has gone backwards and forwards with potential buyers as to the composition of the asset pool, those people said, which began at $13.5bn. Berkshire Hathaway, Warren Buffett’s investment vehicle, is providing financing to Centerbridge and Leucadia to help fund OneMain, one person familiar with the matter said. Read more
Warren Buffett’s Berkshire Hathaway is considering legal action against David Sokol, Mr Buffett’s heir-apparent until his surprise resignation last month, after accusing him of violating company policies over share purchases, the FT reports. A probe by the audit committee concluded that Mr Sokol made “misleadingly incomplete disclosures” to Berkshire’s top managers over his dealings in $10m of shares in the US chemical group Lubrizol, the company said on Wednesday. Lubrizol was acquired by Berkshire for $9bn last month. The report said Berkshire was considering “possible legal action against Mr. Sokol to recover any damage the company has sustained, or his trading profits, or both”. Read more
Warren Buffett’s Berkshire Hathaway is considering legal action against David Sokol, heir apparent to the billionaire investor until his surprise resignation last month, after accusing him of violating company policies over share purchases, reports the FT. A probe by Berkshire’s audit committee found that Sokol made “misleadingly incomplete disclosures” to top managers over his dealings in $10m of shares in US chemical group Lubrizol, acquired for $9bn in March, Berkshire said on Wednesday. The report said Berkshire was considering “possible legal action” against Sokol to recover “any damage the company has sustained, or his trading profits, or both”. DealBook says the move is a “stark turnaround for Berkshire, which has been careful not to criticise its former star manager”. Read more
David Sokol, a former top deputy to US investor Warren Buffett, knew more about Lubrizol’s interest in a potential deal with Berkshire Hathaway than previously disclosed, a revelation that comes as the government examines Sokol’s personal stake in the chemical manufacturer, reports DealBook. A US regulatory filing on Monday showed Sokol was aware in mid-December that Lubrizol’s chief executive planned to talk to his board about a possible acquisition by Buffett’s firm, Berkshire Hathaway. A few weeks later, Sokol bought nearly 100,000 Lubizol shares. The fresh details again raise questions about Sokol’s decision to take a $10m stake in Lubrizol while orchestrating a potential takeover of it. The SEC is considering whether to open a formal investigation of the matter. Read more
David Sokol has defended his decision to purchase stock in a company before recommending it to Warren Buffett, saying another key lieutenant had done the same thing, the FT reports. “I didn’t know anything that others didn’t know,” Sokol said in a CNBC interview. He had done nothing wrong or unethical, he said, but did add that “knowing today what I know, what I would have done differently is not bring the deal to Warren”. The SEC is likely to launch an inquiry into Sokol’s trades, a person familiar with the matter told the WSJ. The circumstances of Sokol’s purchases are a regulatory gray area at least, Reuters says. Read more
Class A shares in Berkshire Hathaway dropped by 2.2% on Thursday, slicing billions of dollars in market value off the company’s market cap following the surprise resignation of David Sokol, heir apparent to Berkshire chief Warren Buffett, reports the FT. Despite investor shock at disclosures about Sokol’s trading in Lubrizol shares that appeared to trigger his departure, followers of Buffett were largely sanguine about the question of who would eventually replace him as chief executive. Lex warns that unless a new Buffett-like figure can be found, “complete with Buffett-like investment performance”, Berkshire “will have to work hard to justify its existence”. Bloomberg reports that US regulators are investigating Sokol’s trades in Lubrizol shares as Berkshire considered buying the US company. Read more